ABOLITION  OF  PERSONAL  TAXATION 


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An  Address  Before  the  First  State  Conference  on  Taxation, 
'Utica,  N.  Y.,  January  12-13,  1911. 


* » 

By  Lawson  Purdy, 

President  Department  of  Taxes  and  Assessment,  City  of 

New  York. 


ALBANY,  N.  Y. 

J.  B.  LYON  COMPANY,  PRINTERS 
1913 


3^  (.  it-'3- 


WITH  THE  COMPLIMENTS  OF  THE 

Nl£W  YOi-K  TAX  R^;:G;  * ASSOCIATION, 

2©  BRtSADWAY,  NEW  YORK. 


- 


• ABOLITION  OF  PERSONAL  TAXATION 


By  Lawson  Purdy 

President  Department  of  Taxes  and  Assessment , City  of 

New  York 

The  subject  of  this  paper  means  the  abolition  of  the  gen- 
eral property  tax  on  personal  property.  It  does  not  mean 
the  abolition  of  the  special  taxes  on  personal  property  which 
now  yield  far  more  revenue  than  the  miserable  remnant  of 
personal  property  still  subject  to  local  taxation. 

During  the  last  thirty  years  tax  after  tax  has  been  in- 
vented and  imposed,  sometimes  in  lieu  of  the  property  tax 
and  sometimes  in  addition  to  it.  To-day  we  are  obtaining 
a revenue  from  various  special  taxes  on  personal  property 
far  in  excess  of  the  revenue  from  the  general  personal  tax. 
The  revenue  from  bank  shares  and  mortgages  alone  exceeds 
the  revenue  from  the  personal  tax.  | Personal  taxes  are  rarely 
a , burden  on  the  rich,  but  they  sometimes  confiscate  the 
meagre  income  of  the  poor.  It  is  high  time  we  finished  the 
work  and  made  an  end  of  a scandalous  condition,  j 

Actual  Conditions 

The  last  report  of  the  State  Board  of  Tax  Commissioners 
is  for  1909  and  an  analysis  of  personal  assessments  discloses 
s- interesting  conditions.  Personal  assessments  were  as  fol- 
/ lows : 


> Total  for  the  State $550,081,116 

^The  city  of  New  York 435,774,611 

bAll  other  cities 54,710,973 

^ All  towns  59,595,532 


The  figures  for  New  York  are  misleading  and  probably 
they  are  for  other  cities  also.  In  New  York  taxes  were  not 
collected  on  as  much  as  $300,000,000  and  the  assessment 


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had  dropped  in  1910  to  $365,000,000  which  was  still  exces- 
sive. 

The  figures  of  the  other  cities  show  plainly  enough  that 
in  some  the  law  is  quite  disregarded  and  in  most  of  them  its 
enforcement  is  a matter  of  voluntary  contribution  or  com- 
promise and  bargain.  To  show  how  the  law  is  nullified  I 
have  selected  ten  cities  and  compared  their  statistics  with 
four  others.  The  ten  are  Buffalo,  Lackawanna,  Tonawanda, 
Niagara  Falls,  Port  Jervis,  Rensselaer,  Mt.  Vernon,  Dun- 
kirk and  Lockport.  The  four  cities  are  Hudson,  Utica, 
Geneva  and  Ogdensburg. 

Population  Real  estate  Personal 

Ten  cities  577,282  $393,501,589  $7,840,495 

Four  cities 114,215  53,168,474  7,916,011 

The  ten  cities  have  five  times  the  population,  nearly  eight 
times  the  real  estate  value  and  less  personal  property.  Now 
we  will  omit  Buffalo,  Dunkirk  and  Lockport  and  the  re- 
maining seven  of  the  group  of  ten  compare  thus  with  the 
four : 

Population  Real  estate  Personal  ■ 

Seven  cities 118,376  $78,006,968  $380,870 

Four  cities 114,215  53,168,474  7,916,011 

The  personal  assessment  in  the  seven  cities  is  less  than 
one-half  of  one  per  cent  of  the  total  assessment  while  the 
personal  assessment  in  the  four  cities  is  12.96  per  cent  of  the 
total  assessment.  The  per  capita  assessment  of  personal 
property  in  the  four  cities  is  69.31  and  in  the  seven  cities  it 
averages  $3.21  and  ranges  from  $5.66  in  Mt.  Vernon  to 
$1.52  in  Port  Jervis  and  two  cents  in  Lackawanna. 

Dunkirk,  New  Rochelle  and  Lockport  are  rich  in  personal 
assessments  compared  with  the  celebrated  seven  but  it  does 
not  seem  as  though  personal  assessments  trouble  them  much. 
These  three  cities  have  a population  of  64,058  and  the  assess- 
ments are  as  follows : 

Real  estate,  $43,898,506;  personal,  $610,125;  per  capita 
personal,  $9.52. 


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If  all  the  forty-eight  cities  except  Hew  York  are  arranged 
according  to  the  percentage  of  their  assessment  of  personal 
property  of  their  total  assessments  we  have  this  result: 

In  7 cities  personal  assessments  are  .49  per  cent. 

In  3 cities  personal  assessments  are  1.37  per  cent. 

In  5 cities  personal  assessments  are  2.36  per  cent. 

In  6 cities  personal  assessments  are  3.37  per  cent. 

In  23  cities  personal  assessments  are  5.28  per  cent. 

In  4 cities  personal  assessments  are  12.96  per  cent. 

In  many  of  these  cities  only  a part  of  the  personal  tax 
levies  are  collected  and  their  finances  are  demoralized  by 
carrying  as  assets  personal  taxes  which  will  never  be  col- 
lected. 

How  let  us  see  what  the  report  shows  as  to  the  condition 
of  the  towns.  There  are  922  towns  and  the  assessed  value 
of  their  real  and  personal  property  is  nearly  the  same  as  that 
of  the  forty-eight  cities: 

Hine  hundred  and  twenty-two  towns,  real  estate,  $1,194,- 
622,456;  personal,  $59,595,532. 

Sixteen  towns  assess  no  personal  property. 

One  hundred  and  thirty-six  towns  assess  $5,000  or  less. 

Three  hundred  and  thirty-four  towns  assess  between 
$5,000  and  $25,000. 

This  shows  that  136  towns  get  about  $100  a year  or  less 
from  personal  property  and  334  towns  get  from  $100  to  $500 
a year.  But  perhaps  you  may  say : “ Consider  the  homes  of 
the  millionaires  in  exile,  Tuxedo  and  Tarrytown.”  Well, 
Tuxedo  assesses  $672,500  and  Tarrytown  $3,387,550. 
What’s  the  use  ? 

I might  give  many  illustrations  of  the  shifts  and  devices 
to  which  we  drive  our  rich  men  and  corporations,  but  many 
instances  will  doubtless  occur  to  you  of  men  who  prefer  to 
own  taxable  bonds  of  some  western  railroad  and  vote  in 
Tuxedo  rather  than  the  bonds  of  our  own  Manhattan  Rail- 
way or  other  Hew  York  mortgages  and  vote  for  the  mayor  of 
Hew  York.  You  have  doubtless  heard  of  domestic  corpora- 


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tions  who  have  palatial  offices  in  New  York  and  yet  prefer 
to  hold  their  annual  meeting  at  their  humble  birthplace  in 
their  master’s  kitchen  at  Wading  River  or  Painted  Post. 

Why  keep  up  the  farce  any  longer  ? Is  it  because  some 
city  or  town  can  humbly  pass  the  hat  and  get  a few  small 
contributions  from  some  man  or  corporation  that  thinks  it 
looks  well  to  pay  something?  You  can’t  dignify  what  they 
pay  by  the  name  of  tax  for  a tax  is  a contribution  enforced 
by  a sovereign  power  and  in  this  State  no  rich  man  need  be 
liable  for  personal  taxes  unless  he  desires  to  he. 

You  may  occasionally  force  some  poor  woman  to  pay  half 
her  income  and  call  the  payment  taxes,  but  I don’t.  I call 
it  blood  money. 

In  some  places  the  law  is  enforced  rigorously;  in  some  it 
is  not  enforced  at  all.  Enforcement  produces  gross  injus- 
tice and  often  drives  away  capital.  On  the  other  hand,  nul- 
lification of  any  law  is  politically  demoralizing.  Some  few 
persons  still  think  that  a more  stringent  law  would  work 
better.  They  think  this  because  they  have  never  really  con- 
sidered the  economic  effect  of  personal  taxation  and  because 
they  have  not  studied  the  results  of  stringent  personal  tax 
laws  when  they  have  been  on  the  statute  hooks  for  sixty 
years. 

It  is  futile  to  consider  what  would  happen  if  all  personal 
property  were  taxed,  for  it  can’t  happen,  so  long  as  the  con- 
stitution of  the  United  States  and  the  constitutions  of  men 
and  things  endure.  If  personal  taxes  are  too  severe  in  one 
state  rich  men  flee  to  another  as  they  have  fled  from  Ohio 
and  settled  in  New  York.  When  capital  commands  a net 
return  of  four  or  five  per  cent  men  will  not  endure  the  taking 
of  two  or  three  per  cent,  or  more,  even  when  this  confiscation 
is  called  taxation.  Some  may  lie  about  their  property  and 
some  may  move.  The  result  is  the  same,  the  law  fails.  If 
all  capital  invested  in  manufacturing  and  merchandizing 
were  equally  and  heavily  taxed,  the  tax  would  be  added  to 
the  cost  of  the  goods  and  burden  consumers.  All  capital 
cannot  he  so  taxed  unless  all  states  agreed  to  follow  the  same 
policy.  They  will  not  agree,  and  it  is  a very  good  thing  they 


will  not,  for  consumers  pay  too  big  a bill  now  and  monopoly 
pays  too  little. 

Anyone  who  will  read  the  Ohio  assessment-rolls  and  com- 
pare the  results  for  the  last  sixty  years  will  agree  with  Ohio 
Tax  Commissioners,  who  say  that  the  Ohio  law  with  its  de- 
mand for  self-assessment  by  sworn  itemized  returns  is  a fail- 
ure and  a fraud;  that  it  drives  capital  from  the  state,  im- 
poses unjust  burdens  on  the  honest  and  defenceless  and 
makes  Ohio  a community  of  liars. 

The  law  is  bad  all  the  way  through,  bad  in  theory  and 
bad  in  practice.  The  stronger  it  is,  the  worse  it  is. 


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